Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Evidence from Vietnam

Abstract

The impact of bank-specific and macroeconomic factors on the profitability of commercial banks in Vietnam is investigated in this study. The data was acquired from ten commercial banks' quarterly financial statements from 2015 to 2019. The study used the ordinary least square regression model to examine the data. According to the empirical data, capital adequacy, asset management, GDP, and the real interest rate are all positively correlated with profitability. Profitability, on the other hand, is adversely correlated with bank size and inflation rate. Only capital adequacy and liquidity, on the other hand, have a considerable impact on the profitability of commercial banks. It can be observed that in Vietnam, commercial bank profitability is mostly influenced by bank-specific variables, with macroeconomic variables having only a little impact throughout the time period investigated. As a result, competent management of the aspects that lead to profitability is vital for commercial bank management in Vietnam to produce remarkable outcomes.